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MySF Administrator
Group: Administrators
Last Login: 29/01/2012 4:16:49 PM
Posts: 208,
Visits: 958
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At the end of each year the rollover function in MySF asks you to revalue your asset as at the 30th of June. This is a requirement of the ATO.
MySF will then automatically generate a journal entry which is:
DR Increase in the Market Value of Assets (This is an asset account)
and CR Income account Increase in the Market value of assets.
This may seem strange that you are declaring income that you have not received because you have not yet sold the assets. This Income Account is Non Taxable so it does not increase your Tax Liability.
For ATO purposes this is all that is required.
One of the problems however is that the Accounting Standards (AAS3) says that where you identify income you need to also make a provision for the Tax that would be payable on that in the future. This would be a liability called Deferred Tax. Your Auditor will probably ask for this journal to be entered.
So in the Year end Rollover (Version 1.4.5) you will be prompted with the question: Do you want to generate entries for Deferred Tax ?
If you answer yes then an additional journal will be created which is
CR Deferred Tax (This is 15% of the Increase in value)
DR Members accounts
This entry will be generated on 30 June. You also have the option at the end of the Year End Rollover to Reverse this Journal (recommended). If you tick yes then the reversal will be processed on 1 July.
What this does then is to have the journals present for the 30th of June and all the reports for Audit purposes, and then reverts back to normal operation on July 1.
Regards
MySF
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Regular Member
Group: Forum Members
Last Login: 1/06/2011 5:36:46 AM
Posts: 19,
Visits: 82
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I have read the explanation of what mysf does in eoy. i cannot remember if i hit the button to make reversal entries. looking at my transaction history it seems i have not. so on my account i had negative increase in mkt value of shares @ 30/6/05 and this has appeared as opening bal on a/c 1171 with the eoy auto opening balances on 1/7/05. Q should I now manually reverse the jnl ( made on 30/6/05 ) on the date 1/7/05 ?
thanks Maurice
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MySF Administrator
Group: Administrators
Last Login: 29/01/2012 4:16:49 PM
Posts: 208,
Visits: 958
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There are two thoughts in the accounting world about this one is that the journals should be reverersed the other is not. this is why we provide both options.
I would suggest you discuss this with your auditor and see what he/she advises
Regards
MySF
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